Britain’s payment systems regulator (PSR) will conduct two market reviews of card fees charged by Visa and Mastercard, the U.S. companies that account for 99% of debit and credit card payments in the UK.
The PSR’s announcement on Tuesday follows heavy pressure from lawmakers to launch full market reviews to tackle card fees paid by retailers, which are typically passed on to consumers.
“We want to understand whether card payments are working well and to make sure that merchants, and ultimately consumers, get a good deal,” said Natalie Timan, the PSR’s head of strategy.
Mastercard said that Britain is one of the most innovative and competitive payments markets in the world and the company was committed to working with the PSR to increase choice in the interests of everyone who makes and receives payments.
Visa said it continues to be one of the most cost-effective and secure ways to pay and be paid, adding that it remains committed to offering consumers and businesses in Britain access to innovative, easy, reliable and secure digital payments.
The first PSR review will look at why there was a fivefold post-Brexit increase in the cross-border interchange fee that Mastercard and Visa charged retailers for consumer purchases by phone or online in the European Union, the watchdog said.
The PSR had already said that preliminary inquiries had been unable to find an explanation for the increase based on volumes, value or mix of transactions.
The fee had been capped by an EU agreement that fell away in Britain after it left the bloc.
The PSR said it wants to understand the rationale behind these increases and whether they are an indication that the market is not working well.
The second review is into fees for services that allow retailers to accept card payments.
Draft terms of reference for the reviews have been put out for public consultation until Aug. 2.
The watchdog indicated to lawmakers last month that it could take years to complete a review and implement concrete changes.